What are the government's options for reducing welfare spending?
Summary
The UK government has said it wants to reduce welfare spending but has not set out a timetable or detailed plan. The Office for Budget Responsibility forecasts that total welfare spending will rise in cash terms, while health and disability benefits have grown particularly quickly since the Covid-19 pandemic.Key Facts
- The OBR forecasts welfare spending will rise from £353bn this year to £431bn in 2032.
- Pensioner support accounts for just under half of total welfare spending, with the state pension making up most of that cost.
- Welfare spending is forecast to increase from 11.1% of GDP to 11.3% by 2032, below its peak of about 12% in 2013.
- After adjusting for inflation, spending on working-age disability benefits rose from £14bn in 2020 to £25bn in 2026.
- The number of 16- to 24-year-olds not in employment, education or training has risen by about 230,000 since 2019 to just under one million.
- An interim review estimated annual PIP spending on 16- to 24-year-olds rose from £1.3bn in 2020 to about £3.2bn in 2025.
- The review projected PIP spending on this age group could reach £6.5bn and cover 700,000 young people within five years.
- A 2025 government plan aimed to save £5bn a year from health-related welfare spending by 2030 through tighter PIP access and lower health-related Universal Credit payments.
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